Sunday, December 30, 2012

A few more things

I was interested to see this end-of-year charity contest: you tell how you would allocate money between GiveWell's top charities, and they donate based on the responses they get. They'll be donating based on votes they get by January 15th.

The site, A Path That's Clear, does some interesting games and discussions on decision-making about giving.

And, for your end-of-2012-tax-year edification, the Freakonomics take on how to donate.

3 comments:

Allocation has been on my mind a lot lately, as I just "rebalanced" my charity portfolio. I'm trying to approach it as an investor would, with core holdings of charities that are ranked high in effectiveness, and smaller allocations for charities that work in other areas (i.e., not directly saving lives) that are important to me but whose effectiveness has not been independently validated.

This makes it sound like I give to a large number of charities, but I only give to five each month; even that may be too much but my donations to each are significant enough to make a difference for each organization (one of which is AMF). It's been a struggle to determine my allocation, balancing the cold hard facts of effectiveness with my personal intuitions and priorities. In many ways it's the same process an investor goes through in determining asset allocation, balancing risk and potential reward.

For me, the difference between investing and giving is that I'm risk-averse in investing and risk-neutral in giving. For my own investment, I'm the only person investing in me, and I want to be sure to end up with something. So I don't want to put all my eggs in one basket, even if it has a good expected value, because I don't want the risk of ending up with nothing.

But with charity, I'm not the only player - there are lots of donors giving to lots of charities. And the end result I care about is the impact of all the giving, not just mine. So I can be risk-neutral, and it's okay to put all my money in the strongest charity I can find. Even if my particular charity fails, other donors were funding other charities. If I literally could persuade all the donors out there, I wouldn't want them to all fund only the AMF, because we'd be putting all our eggs in one basket. But realistically, that's not going to happen.

I feel like someone has done a good writeup on this, but I can't remember who or where.

Thanks, Julia, your argument makes sense. I didn't mean to imply that the diversification in my portfolio is designed to reduce risk; it's simply due to the fact that I'm motivated to tackle more than one type of problem. I want to save lives today, so I donate to AMF. But I also want to save more lives tomorrow by building individual and community resilience. So I give to charities working in those areas. I give to an Oxfam Québec project that is trying to help African communities adapt to the impacts of climate change. I also give to a tiny NGO in my city that collects bicycles, sends them to partner NGOs in developing countries, and builds local capacity to maintain and repair them. Bicycles can become ambulances, a means for doctors to get from one village to another, a key to a livelihood, or a way to get to school. And they're a sustainable form of transportation. Two of my five charities don't work in developing countries, but I support them because I believe in their work. One is a small and well-regarded NGO (Équiterre) that promotes environmental sustainability in my city through a variety of innovative programs. Another is the Nature Conservancy, which has a highly focused mission to preserve biodiversity through land conservation, which is my chosen way to save non-human lives. Those two get my smallest allocations because I know my dollars go further in developing countries, but they're still important to me and I want to contribute to that work.